What are payroll taxes in Australia

Employers in Australia pay payroll taxes on wages and salaries they pay to their employees. In each state or territory, the tax is calculated as a percentage of the total wages paid by the employer.

Australian states and territories have their own payroll tax laws and rates.  Payroll taxes vary based on the size and structure of your business, and the industry that your business operates in.

Payroll tax registration must be done online or with the revenue office in your state or territory.  

Payroll tax returns usually need to be lodged and paid on a monthly basis. Failure to comply with payroll tax obligations may result in penalties and interest charges.  Small businesses and businesses in certain industries may qualify for some exemptions and concessions.   As a small business, it’s best to understand your payroll tax obligations by seeking professional advice from a tax or accounting expert.

How to calculate payroll taxes for small businesses in Australia

Step 1:  Determine payroll tax liability for your business.  

Payroll tax is generally due if total payroll for your business  exceeds the tax-free threshold in your state or territory.

Step 2:  Find taxable wages total

To add up your taxable wages, you must include all wages, salaries, bonuses, and other payments you make to your employees in Australia.  You may need to adjust superannuation contributions, fringe benefits, and contractor payments.

Step 3: Check the applicable payroll tax rate for your state

Each state and territory in Australia has its own payroll tax rate.  Payroll tax rates are determined by factors like business size, business or entity structure, and your industry. The revenue office website for your state or territory has the current rates.

Step 4: Identify any exemptions or deductions

Business or industry exemptions or deductions are available in some states and territories. Consult the revenue office website or seek professional advice.

Step 5: Payroll tax calculation

Calculate your payroll tax payable for the period by multiplying your taxable wages total (step 2) by the appropriate payroll tax rate (step 3). Then, adjust for any exemptions or deductions (step 4). 

Step 6: Lodge and pay your payroll tax return

Payroll tax returns must be filed and your payroll tax payments must be made by the due date. You can usually do this online by visiting the revenue office website for your state or territory.

Payroll tax laws and rates can change from time to time, so keep up with any updates and changes that might affect your business. By seeking professional advice from an accountant or tax expert, you can ensure payroll tax is calculated and paid correctly.